How the Strait of Hormuz Crisis Is Squeezing a U.S. Medical Supplier
CNBC reported Sunday that the Strait of Hormuz oil shock is forcing a Pennsylvania medical supply company to absorb surging costs it cannot fully pass on to its biggest customer — the U.S. government.
A Business Upended by a Distant Waterway
David Navazio, founder and CEO of Yardley-based Gentell, told CNBC he had never thought about the Strait of Hormuz before the war in Iran began. That has changed sharply. His company manufactures medical dressings using petrochemical derivatives sourced from global oil and gas production. Some of those raw material costs have climbed as much as 30% since traffic through the strait stalled. Container freight has moved in tandem. Shipping a single container from New Zealand to California now runs around $4,500 — more than double the pre-war rate of roughly $2,000.
Why Gentell Cannot Simply Raise Prices
The company supplies wound-care products to nearly 5,000 nursing homes across the United States. Its largest revenue source is Medicare, and those contracts are typically locked in on an annual basis. That structure leaves Gentell absorbing much of the cost increase in the near term. Kevin Quilty, Gentell’s chief operating officer, described the current pressure as a “margin crunch.” He added that some pricing adjustment is likely inevitable if volatility persists.
Background — Petrochemicals Are Everywhere
The ripple effects of the Hormuz closure extend well beyond fuel pumps. Oil and gas derivatives are embedded in more than 6,000 everyday products, including aspirin, contact lenses, vitamin capsules and computer keyboards. The national average U.S. gasoline price has surged above $4.50 a gallon — a level not seen in nearly four years. For manufacturers like Gentell, the squeeze arrives on two fronts simultaneously — the cost of inputs and the cost of moving them.
Also Read: Why Oil Markets Are Watching the Strait of Hormuz
Pandemic Playbook, and What Comes Next
Quilty said the Covid-19 supply chain crisis actually prepared Gentell for moments like this. That episode underscored the importance of locking in supplier schedules early. He characterized the pandemic as the harder test — for now. But both executives acknowledge that timeline is everything. President Donald Trump said Sunday that negotiations to end the Iran conflict and reopen the waterway are ongoing, though he cautioned his team against rushing a settlement. Analysts warn that even once the strait reopens, shipping traffic could take months to normalize. Navazio was direct about his contingency plan if the conflict drags on. “Then we’re going to raise the price,” he told CNBC.
